Bitcoin ended the second quarter of 2026 in its deepest and longest downturn since the last bear market, but Bitwise Asset Management said the setup looks more like a bottoming phase than a collapse, according to its newly released Q3 2026 Crypto Market Review.
The $9 billion crypto asset manager said bitcoin fell 13.4% in Q2 and 32.9% for the year. In June, bitcoin dropped below $60,000 for the first time since 2024 and traded about 52% below its October peak of $126,080. Bitwise said that extends what it calls crypto winter to nine months, while the broader Bitwise 10 Large Cap Crypto Index posted a third straight quarter of negative returns, its longest losing streak since 2022.
Chief Investment Officer Matt Hougan wrote that crypto sentiment is among the worst he has seen in his eight years in the industry.
Bitcoin outperformed other major large-cap tokens
Even in the selloff, bitcoin held up better than several major peers. Its 32.9% year-to-date decline was smaller than Ethereum’s 46.9% drop, Solana’s 40.6% decline, and Cardano’s 56.5% slide.
Bitwise said bitcoin now accounts for 64.2% of the roughly $1.88 trillion crypto market and makes up 77.4% of the Bitwise 10 index, reinforcing its position as the sector’s relative safe haven during a broad market downturn.
U.S. spot bitcoin ETPs recorded their worst quarter since launch
The sharpest data point in the report came from exchange-traded products. Bitwise said U.S. spot bitcoin ETPs saw $4.9 billion in net outflows during Q2, their worst quarter since launching in January 2024.
Assets under management still stood at $72.4 billion, and cumulative net inflows since inception remained at $53.4 billion. Bitwise said the reversal showed how quickly professional sentiment can turn.
Regulatory filings show investment advisors hold about 43% of professionally owned ETP shares, while hedge fund managers hold another 28%. Among disclosed holders, Jane Street held $1.8 billion and Millennium held $1.0 billion, the largest reported positions.
Even so, structural demand continued to exceed new supply. Since the ETFs launched, spot ETPs and public companies have bought roughly 3.6 times the amount of bitcoin mined over the same period, or about 1.55 million BTC of demand against 455,416 BTC of new supply, according to the report.
Public companies added more bitcoin, while Strategy sold for the first time since 2022
Bitwise said public-company bitcoin treasuries rose to 1.28 million BTC, up 11.3% from the prior quarter and equal to 6.11% of bitcoin’s 21 million cap. The number of companies holding bitcoin fell by three, however, to 184. Companies added 130,467 BTC during Q2.
Strategy remained the largest holder by a wide margin with 846,842 BTC. It was followed by XXI with 43,514 BTC, Metaplanet with 40,177 BTC, MARA Holdings with 35,303 BTC, and Bitcoin Standard Treasury Company with 30,021 BTC.
The report said Strategy sold $218 million worth of bitcoin late in the quarter to fund dividend obligations, marking its first bitcoin sale since 2022. Even after that sale, its holdings were valued at $52.3 billion, and it still had a cash reserve of $2.55 billion.
Its stock also came under pressure. Strategy shares, trading under MSTR, fell 30.3% in Q2 and 42.8% year to date, making it one of the weaker performers among crypto-related equities.
Market structure changes continued as CLARITY Act stalled
The review also pointed to several developments in bitcoin market infrastructure. The Commodity Futures Trading Commission approved the first bitcoin perpetual futures on a U.S.-regulated exchange, Kalshi. Charles Schwab launched retail spot BTC trading, and E*Trade extended access to its 8.6 million users.
On regulation, the market-structure bill known as the CLARITY Act stalled in the Senate over ethics provisions. Prediction markets now put the odds of passage in 2026 at around 20%, down from 75% in May. Bitwise said passage of the CLARITY Act would likely mark the bottom, while failure would still leave the industry building under friendly regulators.
Bitwise says market prices still reflect bear-market conditions
Hougan’s broader argument is that the industry keeps advancing from one cycle to the next. The report said bitcoin’s historical seasonality shows an average July gain of 10.7%. It also said Bitwise portfolio research found that adding a 5% bitcoin allocation to a traditional 60/40 portfolio improved results in 100% of three-year rolling windows since 2014.
Hougan wrote that the market is still assigning bear-market prices to an industry that is twice the size it was at the last cycle bottom. Bitcoin was trading below $62,000 at the time of publication.
